According to The Wall Street Journal, as beer prices rise in response to the rising costs of raw inputs, bars and restaurants are serving less than a pint of beer by substituting thick-bottomed 14 oz. glasses and by pouring more head than they used to. Jeff Alworth, of the Honest Pint Project, has more details.

To me, this problem presents an opportunity to think about the sorts of problems that regulation by the state is able to solve and the sorts of problems that are best left to actors in the market without legal intervention. I can think of three basic approaches:

This is a simple false advertising problem, and can be handled by the existing body of tort and consumer protection law.

Regulation is necessary because this is a harm that will not be adequately addressed either by false advertising tort law, nor by market action.

Little or no government action is necessary because, to the extent that this is really a problem, people will stop going to establishments that short them on beer.

I think that the first position is the weakest, simply because of how expensive it is to bring an action in tort. It’s certainly not worth it in this sort of a case, and if I were a manager I would shrug off any customer who threatened to sue me for false advertising over a few ounces of beer. On the other hand, I would be careful that my state’s Attorney General didn’t get too many complaints about the practice, since in many (if not all) states the A.G. has a consumer protection division that handles exactly this sort of problem. However, the problem only exists as long as the bar is selling their beer in “pints” so a simple change of menu text would probably protect the company. That’s where the thick-bottomed 14 oz. glasses become useful to the bar: they look like pints, but as long as you’re not calling them “pints” you’re probably safe here.

The second option probably has some legs: I could imagine a regulation requiring that beer be sold in glasses with a line etched in them at the 16 oz. mark, similar to the way it is sold in England (although in England, if I’m not mistaken, the etching is of a 19.2 oz. Imperial pint). This has some merit, as it allows the patron a ready way to determine whether he is being ripped off — he can see if he’s getting a short pour. Also, a glass that were etched at a smaller amount but marked as a pint would be a pretty good badge of fraud, making a much easier private suit.

I think that the third option, although interesting, has little merit in the present case because because the patron will bear larger costs in policing the sizes of the pint he is served than the benefits he will get in getting the right amount of beer. The costs of policing are fairly fixed for all sorts of transactions: you have to verify that you are getting what you think you are getting, and if you aren’t, you have to bring it up with the vendor; you incur a social cost for bringing it up, and quite possibly another social cost for even policing it in the first place — it isn’t terribly cool to pour your beer into a measuring glass. The benefits, in this case, are probably no more than three ounces of beer. I have trouble imagining that beer prices will rise to a level such that the price of three ounces of beer is worth policing one’s pour amount.

It is difficult for me to see where the efficient outcome lies. It may be true that when you’ve paid your five dollars for a pint, you should expect a full pint and not just 14 oz., but what if, in order to stay in business, a bar would have to charge $5.75 for the full pint where it only charges an even $5.00 for the 14 oz. beer? What if the bar has determined that $5.00 is the best price-point for a beer, and has had to adjust its portioning accordingly, rather than keeping portioning the same and raising the price? What if people buy more beer by volume at $5.00 / beer than they do at $5.75 / beer due to perceptions about how much money they are spending? None of our answers to these questions justifies calling a 14oz. glass a pint: that’s false advertising. But maybe a bar should be able to sell beer in any amounts it wants.

Readers, I crave your thoughts. Is this a problem that regulation can efficiently solve? What sort of regulation? What would an efficient outcome look like?

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I would have to argue that the best option is no regulation. If the worry ist that beer will go up in price, mandating that bars buy new glasses with “proof” surely won’t help that. I like the third argument the best.

If consumers are expeirencing a case wherein they aren’t becoming intoxicated enough for their money, or if they get tired of getting glasses half filled with foam, they may simply stop going to that establishment and attend an establishment that lowers costs some other way–perhaps by subsidizing the beers with higher prices on mixed drinks or operating in a different neighborhood–without intervention. If not, they can bring it up with the establishment and actually measure the amount they’re getting, if they really think it is a problem.

If we were to mandate etched cups, the prices might rise doubly–due to having to purchase new cups and having to actually sell the proper amount of beer. Let the market decide.

If the experience of smoking is to teach us anything, though, it is that establishments will do what they want. In Honolulu, we have plenty of bars that ignore the smoking ban. Honestly, what would stop bar owners from buying incorrectly etched glasses, or not buying them at all? Nothing. Not all problems can be fixed through more laws. The problem of agflation had its roots in more laws that distorted the market for food.

Obviously, the most effecient outcome would be to regulate the government to stop distorting grain prices. I guess that might be a different matter, though.

Thanks for writing! I wasn’t especially convinced by the third option my own self until I finished writing it. I am wary of the conclusion that the market is the solution to one’s problems, but I suspect that you are right in this case. Part of the reason regulation seems like a bad idea in retrospect is that it isn’t clear where the efficient outcomes lie, so it’s difficult to say that an efficient outcome isn’t being reached already.

You are right, too, about the distortion of grain prices: too often I think we forget that our market conditions arise as a result of policy decisions and government action.

I suspect that policing one’s own beer is as simple as paying attention to how much head the beer has when you receive it and then taking a gander at the glass afterwards. More head than you’re used to? Thicker base than you’re used to? I know I’ve had a fair number of pints, and I have a pretty good expectation of what a pint glass should look like. If I’m uncertain, I can ask my companions: do this look unusual to you? If we all think that all of our glasses look unusual, then we can express our concerns to the manager without any social cost among friends. If it is an establishment worth patronizing, the manager will be up front when called to task: yes, the price of beer is higher, and we’re compensating; or, you’re right, we should tell people that other bars are cheating them and while you may pay more here, you’re getting an honest price for an honest pint.

As for the costs of buying new glasses that are measured and etched: what about the costs of buying new glasses with thick bases? If they’re buying new glasses either way, strikes me that the way to go is to go the honest route…especially if people are going to be asking questions.

The biggest hurdle for the market to succeed on its own is knowledge. How many pint drinkers know that some servings aren’t real pints? If everyone is suspicious, a solution (or apparent need for regulation) will arise. So, another solution:

4. Raise awareness that some shoddy bars are shorting patrons at the grassroots level like with blog posts like this. Then let the market take over.

Your point about the prerequisites for a market solution seems about right on. It’s what the Honest Pint Project is doing, I suppose.

Today I was thinking of some of the suspicious customers I’ve had to deal with in my retail jobs. It’s not that an honest business ever objects in principle to the customer checking amounts, but it certainly slows down service. This inevitably gives front-line staff a bad attitude and winds up making the shift more difficult to manage.

On reflection, I suspect it would be easy for a small number of vocal drinkers to enforce a “real pint” standard through market action. Thanks again for writing!